Iran war hits energy flows: After Qatar, Bahrain's oil firm declares force majeure after refinery attack

After QatarEnergy suspended contractual obligations last week following attacks on its liquefied natural gas facilities, Bahrain's state oil company has now taken the same step after an Iranian attack set its refinery ablaze, The Associated Press reported on Monday.

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The move marks a further escalation in the economic fallout of the Iran war, which is now disrupting not just military and civilian infrastructure but also contractual energy flows across the Gulf. Bahrain's force majeure declaration, carried Monday by the state-run Bahrain News Agency, came as oil prices climbed above $114 a barrel and governments across the region assessed the damage to critical facilities.

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Bahrain's state oil company declared force majeure on its shipments after the refinery attack. The Bahrain News Agency said the company's operations "have been affected by the ongoing regional conflict in the Middle East and the recent attack on its refinery complex." It added that domestic demand would continue to be met.

Force majeure is a legal provision that companies invoke when extraordinary events prevent them from meeting contractual obligations. QatarEnergy made a similar declaration last Wednesday after two of its LNG facilities were attacked, forcing a production pause and sending fresh volatility through global energy markets.

The Bahrain move came a day after the kingdom said an Iranian drone attack had caused "material damage" to a desalination plant. Bahrain said on Sunday that the strike did not disrupt water supplies, but it marked the first time an Arab country had reported Iran targeting a desalination facility during the nine-day conflict.

That raised concern well beyond Bahrain. Hundreds of desalination plants line the Persian Gulf coast, and Gulf countries depend heavily on them for drinking water.

The energy shock was quickly reflected in the market. Brent crude rose above $114 per barrel on Monday for the first time since 2022, while West Texas Intermediate also traded near $114. The jump followed steep gains last week as the war widened to countries and facilities central to the production and movement of oil and gas from the Persian Gulf.

The conflict began on February 28 with joint U.S.-Israeli strikes on Iranian targets. Since then, attacks have spread across the region, hitting oil, gas and water infrastructure and raising fears that the war is beginning to damage the economic systems that underpin Gulf energy exports.